THE BASEMENT – TECHNICAL INDICATORS

Technical Indicators are tools with the predefined analysis and set of algorithms.
Indicators can be used as the supporting tool to confirm the trend identified using dow theory, price patterns & candlestick analysis.
Indicators may fail in some scenarios.
Moving Average- Technical Indicator
Moving average works during trending & may not work during sideways
Moving Average indicates the trend with the average price value for previous 21 days.
RSI (Relative Strength Index) – Technical Indicators
RSI works well in non trending time and indicates the overbought & oversold region.
Fibonacci series is the sequence of numbers in which each number is the sum of the previous two numbers in the sequence.
Fibonacci Series is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,………….
Golden Mean is 1.618
Logic behind golden mean is the ratio of two consecutive numbers in fibonacci series is same for all the two consecutive numbers.
Fibonacci Retracements are ratios used to identify potential reversal levels.
These ratios are found in the Fibonacci sequence.
The most popular Fibonacci Retracements ratios are
1. 61.8% – dividing one number in the series by the number that follows it. For example: 8/13 = 0.6153
2. 38.2% – ratio is found by dividing one number in the series by the number that is found two places to the right.
3. 23.6% ratio is found by dividing one number in the series by the number that is three places to the right.